DP005D5857 Fort Lauderdale Hospital, Inc. rpts/2010...Fort Lauderdale Hospital, Inc. d/b/a Fort Lauderdale Hospital (the “Hospital”), a wholly–owned subsidiary of Universal Health

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalReport on State Financial Assistance in Accordancewith Florida Statutes Section 215.97 and Rules of theAuditor General of the State ofFlorida Chapter 10.650December 31, 2010

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalIndexDecember 31, 2010

Page(s)

Report of Independent Certified Public Accountants ..................................................................... 1–2

Financial Statements

Balance Sheet ........................................................................................................................................3

Statement of Income and Changes in Stockholder's Equity.....................................................................4

Statement of Cash Flows........................................................................................................................5

Notes to Financial Statements .......................................................................................................... 6–10

Supplemental Information

Schedule of Expenditures of Federal Awards and State Financial Assistance .......................................11

Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance .........................12

Report of Independent Certified Public Accountants on Internal Control Over FinancialReporting and on Compliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance with Government Auditing Standards ................................... 13–14

Report of Independent Certified Public Accountants on Compliance with RequirementsThat Could Have a Direct and Material Effect on Each Major State FinancialAssistance Project and on Internal Control Over Compliance in Accordancewith Florida Statutes Section 215.97 and Rules of the Auditor General Chapter 10.650 .................. 15–16

Schedule of Findings and Questioned Costs

Section I: Summary of Certified Public Accountant’s Results.................................................................17

Section II: Financial Statement Findings ...............................................................................................18

Section III: State Financial Assistance Findings and Questioned Costs .................................................18

Summary Schedule of Prior Audit Findings

Summary Schedule of Prior Audit Findings ...........................................................................................19

Report of Independent Certified Public Accountants

The Board of Directors

Fort Lauderdale Hospital, Inc.

d/b/a Fort Lauderdale Hospital

In our opinion, the accompanying balance sheet and the related statements of income and changes in

stockholder’s equity and of cash flows present fairly, in all material respects, the financial position of Fort

Lauderdale Hospital, Inc. d/b/a Fort Lauderdale Hospital (the “Hospital”) as of December 31, 2010, and

the results of its operations and its cash flows for the year then ended, in conformity with accounting

principles generally accepted in the United States of America. These financial statements are the

responsibility of the Hospital’s management. Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit of these statements in accordance with auditing

standards generally accepted in the United States of America and the standards applicable to financial

audits contained in Government Auditing Standards issued by the Comptroller General of the United

States. Those standards require that we plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial statements, assessing the

accounting principles used and significant estimates made by management, and evaluating the overall

financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Notes 1 and 2 to the financial statements, the Hospital has significant transactions with

Universal Health Services, Inc. (the “Parent”), the terms of which may not necessarily be the same as

those that would result in transactions among unrelated parties. Further, the Parent has committed to

making contributions to the Hospital, as necessary, to fulfill any operating requirements or additional

financing that may be needed to sustain operations through December 31, 2011.

In accordance with Government Auditing Standards, we have also issued our report dated June 20, 2011

on our consideration of the Hospital's internal control over financial reporting and on our tests of its

compliance with certain provisions of laws, regulations, contracts and grant agreements and other

matters. The purpose of that report is to describe the scope of our testing of internal control over financial

reporting and compliance and the results of that testing, and not to provide an opinion on the internal

control over financial reporting or on compliance. That report is an integral part of an audit performed in

accordance with Government Auditing Standards and should be considered in assessing the results of our

audit.

PricewaterhouseCoopers LLP, 830 Crescent Centre Drive, Suite 260, Nashville, TN 37067T: (615) 503 2860, F: (615) 503 2870, www.pwc.com/us

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Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as

a whole. The accompanying Schedule of Expenditures of State Financial Assistance is required by the

State of Florida's Department of Financial Services' Florida Administrative Code Section 69I-5.003. The

schedule is presented for purposes of additional analysis as required by Florida Statutes Section 215.97

and Rules of the Auditor General of the State of Florida Chapter 10.65, and is not a required part of the

basic financial statements. Such information has been subjected to the auditing procedures applied in the

audit of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation

to the basic financial statements taken as a whole.

June 20, 2011

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalBalance SheetDecember 31, 2010

The accompanying notes are an integral part of these financial statements.

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Assets

Current assets

Cash 51,195$

Accounts receivable, net of allowance for doubtful accounts of $637,454 2,217,299Cost report settlement 527,706

Other current assets 456,937

Total current assets 3,253,137

Property and equipmentBuildings and improvements 1,025,036Equipment 925,907

Assets under capital leases 278,204

Total property and equipment 2,229,147

Less: Accumulated depreciation (1,025,668)

Property and equipment, net 1,203,479

Cost in excess of assets acquired 11,043,037

Total assets 15,499,653$

Liabilities and Stockholder's Equity

Current liabilities

Accounts payable 1,056,858$Accrued salaries and benefits 666,242

Other accrued liabilities 51,333Obligations under capital lease 61,310

Total current liabilities 1,835,743

Due to Parent 188,207

Total liabilities 2,023,950

Stockholder's equityCommon stock, $1par value; authorized 1,000 shares;

1,000 shares issued and outstanding at December 31, 2010 1,000Accumulated equity 13,474,703

Total liabilities and stockholder's equity 15,499,653$

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalStatement of Income and Changes in Stockholder’s EquityYear Ended December 31, 2010


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Revenues

Net patient service revenue 19,084,792$

Other revenue 19,884

19,104,676

Operating expenses

Salaries and benefits 10,034,683Purchased services 1,323,503Supplies 1,320,693Rent expense 531,298Other operating expenses 2,055,069

Provision for doubtful accounts 688,853Depreciation and amortization 225,128

Management fees allocated by Parent 597,291Interest expense 845,843

Total operating expenses 17,622,361

Income before tax provision 1,482,315

Income tax provision 577,392

Net income 904,923

Stockholder's Equity

Beginning of year (2,655,859)

Forgiveness of Due to Parent 15,226,639

End of year 13,475,703$

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalStatement of Cash FlowsYear Ended December 31, 2010


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Cash flows from operating activities

Net income 904,923$

Adjustments to reconcile net loss to net cash provided by operating activitiesDepreciation and amortization 225,128

Provision for doubtful accounts 688,853

Changes in operating assets and liabilitiesAccounts receivable (260,689)

Other assets 66,025Accounts payable and accrued expenses 233,426

Accrued salaries and benefits 32,680Other current liabilities (550,807)

Net cash provided by operating activities 1,339,539

Cash flows from investing activity

Purchases of property and equipment (226,503)

Net cash used in investing activity (226,503)

Cash flows from financing activities

Transfers from Parent, net (1,006,168)Payments made under capital lease obligation (56,173)

Net cash used in financing activities (1,062,341)

Net increase in cash 50,695

Cash

Beginning of year 500

End of year 51,195$

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalNotes to Financial StatementsDecember 31, 2010

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1. Summary of Significant Accounting Policies

Description of BusinessFort Lauderdale Hospital, Inc. d/b/a Fort Lauderdale Hospital (the “Hospital”), a wholly–ownedsubsidiary of Universal Health Services, Inc. (the “Parent”), was incorporated on April 1, 2004.Effective June 1, 2004, the Hospital acquired substantially all of the net assets of Fort LauderdaleHospital Management, LLC from Northern Healthcare Associates. The Hospital was acquired byUniversal Health Services, Inc. on November 15, 2010, in conjunction with the purchase ofPsychiatric Solutions, Inc. The Hospital provides inpatient and outpatient care to adults andadolescents suffering from psychiatric illnesses and/or chemical dependency. Services areprovided from a free standing facility located in Fort Lauderdale, Florida. The Hospital isdependent upon its Parent for operating and financial support. The Parent has committed toprovide such support through December 31, 2011.

Basis of PresentationThe accompanying financial statements have been prepared in accordance with accountingprinciples generally accepted in the United States (“GAAP”). The preparation of financialstatements in conformity with accounting principles generally accepted in the United Statesrequires management to make estimates and assumptions that affect the reported amounts anddisclosures in the financial statements. Actual results could differ from these estimates.

Net Patient Service RevenuePatient service revenue is reported on the accrual basis in the period in which services areprovided, at established rates. Net patient service revenue includes amounts the Hospitalestimates to be reimbursable by federal and state governments under Medicare and other similarprograms, privately sponsored managed care and commercial insurance plans and other payersunder provisions of cost or prospective reimbursement formulas in effect. Amounts received aregenerally less than the established billing rates and the differences (contractual adjustments) arereported as deductions from patient service revenue at the time the service is rendered. For theyear ended December 31, 2010, approximately 53% and 27% of the Hospital’s net revenuesrelated to patients participating in the Medicare and managed care programs, respectively.

Reimbursement regulations are complex and various federal and state government contracts mayinclude multiple reimbursement mechanisms for services provided. The Hospital estimates patientservice revenue on a payer-specific basis given its interpretation of the applicable regulations orcontract terms. The services provided and related reimbursements are often subject tointerpretation and could result in payments differing from our estimates. Additionally, updatedregulations and contract negotiations occur frequently, necessitating continual review andassessment of the estimation process by management.

The Hospital provides care without charge to patients who are financially unable to pay for thehealth care services they receive. Because the Hospital does not pursue collection of amountsdetermined to qualify as charity care, they are not reported in revenues. Charges forgone from theprovision of charity care during the year ended December 31, 2010 were $34,880.

The Hospital provides services under a service agreement with the Florida Department of Childrenand Families. Revenues related to this agreement of approximately $3,418,442 are included in netpatient service revenue within the accompanying statement of income and changes instockholder’s equity. Receivables related to this agreement of approximately $297,892 areincluded in accounts receivable in the accompanying balance sheet.


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Accounts ReceivableAccounts receivable is comprised of patient service revenue and is recorded net of contractualadjustments and estimated bad debts. Such amounts are owed by various governmentalagencies, insurance companies and private patients. At December 31, 2010, Medicare andmanaged care comprised approximately 42% and 17%, respectively, of net patient receivables.Concentration of credit risk from other payers is limited by the number of patients and payers.

Allowance for Doubtful AccountsThe Hospital’s ability to collect outstanding patient receivables from third-party payers is critical toits operating performance and cash flows. The primary collection risk with regard to patientreceivables lies with uninsured patient accounts or patient accounts for which primary insurancehas paid, but the portion owed by the patient remains outstanding. The Hospital estimates theallowance for doubtful accounts primarily based on the age of the account since the date of patientdischarge. The Hospital continually monitors its accounts receivable balances and utilizes cashcollections data to support its estimates of the provision for doubtful accounts. Significant changesin payor mix or business office operations could have a significant impact on the Hospital’s resultsof operations and cash flows.

Allowance for Contractual DiscountsReimbursement regulations are complex and various managed care contracts may include multiplereimbursement mechanisms for different types of services provided by the Hospital. The Hospitalestimates the allowance for contractual discounts on a payor-specific basis given its interpretationof the applicable regulations or contract terms. The services authorized and provided and relatedreimbursement are often subject to interpretation and could result in payments differing fromestimates. Additionally, updated regulations and contract negotiations occur frequentlynecessitating continual review and assessment of the estimation process by the Hospital’smanagement.

Income TaxesThe Hospital is included in the consolidated tax return of its Parent and, through an agreement withthe Parent, accounts for its share of consolidated tax obligations using an “as if separate return”methodology. The provision for income taxes is determined utilizing maximum federal and statestatutory rates applied to income before income taxes. Income tax benefits are not allocated to theHospital for losses before income taxes. Income tax liabilities, including deferred amounts andpayments, are reflected in the amounts due to Parent.

Insurance Risk ProgramsThe Hospital participates in the Parent’s group insurance programs. Costs related to theseprograms are allocated to the Hospital by the Parent based on various methodologies whichreasonably approximate the Hospital’s portion of the program cost, including allocations based onnumber of beds, risks associated with Hospital’s employees and property value.


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Under a number of the Parent’s insurance programs in which the Hospital participates, whichincludes the employee health insurance program, the workers compensation insurance programs,medical malpractice insurance and certain components of the property and casualty insuranceprogram, the Parent is liable for a portion of the losses. In these cases, the liabilities for claims areaccrued for under an occurrence based principal whereby an estimation of the losses that will beincurred in a respective accounting period is made and that estimated liability is accrued by theParent and included in the total costs for the program that is allocated to the Hospital on a pro-ratabasis. Actuarial methods are utilized in estimating the losses. Professional and general liabilitycosts and workers compensation costs allocated to the Hospital during the year endedDecember 31, 2010 were $396,837 and $215,725, respectively.

Property and EquipmentProperty and equipment is stated at cost, net of accumulated depreciation. Depreciation wasrecorded using the straight-line method over the estimated useful lives of the assets as follows:

Building improvements 5-20 yearsEquipment 3-15 years

When events, circumstances, and operating results indicate that the carrying values of certain long-lived assets might be impaired, the Company prepares projections of the undiscounted future cashflows expected to result from the use of the assets and their eventual disposition. If the projectionsindicate that the recorded amounts are not expected to be recoverable, such amounts are reducedto estimated fair value. Fair value is estimated based upon projections of discounted cash flows.

Costs in Excess of Net Assets Acquired (Goodwill)Goodwill is reviewed at least annually for impairment. Potential impairment exists if the Hospital’scarrying value exceeds the fair value of the Hospital. If the Hospital identifies a potentialimpairment of goodwill, the implied fair value of goodwill is determined. If the carrying value ofgoodwill exceeds its implied fair value, an impairment loss is recorded. The annual impairment testof goodwill in 2010 resulted in no goodwill impairment.

Advertising CostsThe Hospital expenses advertising costs as incurred. Total advertising expense for the year endedDecember 31, 2010 was $202,829.

Fair Value of Financial InstrumentsThe carrying amounts reported in the balance sheets for accounts receivable and accountspayable approximate their fair value given the short-term maturity of these instruments.

Subsequent EventsThe Hospital has evaluated subsequent events through June 20, 2011, the date the financialstatements were available to be issued.


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2. Transfers to Parent

UHS provides certain general and administrative services to the Hospital, including finance, legal,regulatory, risk management, treasury, information systems, and human resources. Amanagement fee is allocated to the Hospital considering the nature and extent of such servicesduring the year. Also, certain other costs incurred by UHS are allocated to the Hospital. Totalmanagement fees and other Parent allocations were $597,291 for the year ended December 31,2010. Because UHS can exercise its discretion when allocating management fees and other coststo the Hospital, the financial position and operating results presented herein may not necessarily beindicative of those that would have occurred if the Hospital had operated autonomously.

Substantially all of the Hospital’s cash accounts are linked to UHS’s centralized cash managementsystem. Accordingly, substantially all cash generated from or used in the Hospital’s operations hasbeen transferred to and from UHS. For instance, UHS funds nearly all routine and capital cashdisbursements on behalf of the Hospital. Likewise, on a daily basis, the Hospital transfers its cashreceipts directly to the concentrated bank account of UHS.

The forgiveness of Due to Parent included in changes in stockholder’s equity representsforgiveness of intercompany balances due to PSI, the former parent, which were forgiven by UHSupon acquisition at November 15, 2010.

UHS maintains a contributory retirement plan for eligible employees of the Hospital. The Hospitalmade no discretionary contributions during 2010 related to benefits earned under this plan.

3. Contingencies and Healthcare Regulation

Commitments and ContingenciesThe Hospital is subject to legal proceedings and claims that have arisen in the ordinary course ofits business and have not been finally adjudicated, which include malpractice claims covered underthe Parent’s insurance policy. In the opinion of management, the outcome of these actions will nothave a material effect on the financial position or results of operations of the Hospital.

Laws and regulations governing the Medicare program are complex and subject to interpretation.The Hospitals believe that they are in compliance with all applicable laws and regulations.Compliance with such laws and regulations can be subject to government review and interpretationas well as significant regulatory action including fines, penalties, and exclusion from the Medicareprogram.


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4. Leases

The Hospital has assumed or executed various leases with third parties for office and otherequipment. The future minimum lease payments under noncancelable operating and capital leasewith initial terms greater than one year at December 31, 2010 are as follows:

OperatingLeases

2011 477,299$

2012 411,1592013 408,4272014 400,8702015 387,384Thereafter 1,388,126

Total minimum lease payments 3,473,265$

CapitalLease

2011 63,120$

Total minimum lease payments 63,120

Less: Amount representing interest 1,810

Present value of net minimum lease payments 61,310$

Total rental expense for operating leases was $531,298 for the year ended December 31, 2010.

5. Due to Government Agencies

The Health Care Consumer Protection and Awareness Act of 1984 created the Public MedicalAssistance Trust Fund for the treatment of indigent patients. The Hospital is assessed an amountequal to 1.5% of net inpatient service revenues, 1.0% of net outpatient service revenues, and 0.4%of operating expenses, less bad debt, to be paid on a quarterly basis. The Hospital’s expenserelated to this assessment for the year ended December 31, 2010 totaled $305,921.

Supplemental Information

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalSchedule of Expenditures of Federal Awards and State Financial AssistanceYear Ended December 31, 2010

The accompanying notes are an integral part of this schedule.

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Federal/State Agency CFDA Contract/Pass-Through Entity CSFA Grant

Federal Program/State Project Number Number Expenditures

Schedule of Expenditures of Federal Awards - UnauditedU.S. Department of Health and Human Services

Indirect ProjectsPassed through State of Florida Department of Children and Families

Block Grants for Prevention and Treatment of Substance Abuse 93.959 JH303 156,220$

Total Expenditures of Federal Awards 156,220$

Schedule of Expenditures of State Financial AssistanceState of Florida Department of Children and Families

Direct ProjectsChildren's Baker Act Services 60.001 JH303 552,056$Baker Act 60.006 JH303 1,431,725

Substance Abuse Detoxification Services for Children 60.028 JH303 78,110Substance Abuse Treatment and Aftercare Services for Children 60.030 JH303 874,006

Children's Mental Health SIPP RTC Non-Medicaid Eligible 60.048 JH303 175,167Adult Community Mental Health - Emergency Stabilization 60.054 JH303 91,842

Children's Mental Health Emergency Stabilization 60.057 JH303 214,444

Total Expenditures of State Financial Assistance 3,417,350$

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalNotes to Schedule of Expenditures of Federal Awards andState Financial AssistanceDecember 31, 2010

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1. Basis of Presentation

The accompanying Schedule of Expenditures of Federal Awards and Schedule of State FinancialAssistance presents the activity of all federal and state financial assistance projects of the Hospitalfor the year ended December 31, 2010 and is presented on the accrual basis of accounting. Theinformation in these schedules is presented in accordance with the requirements of FloridaStatutes Section 215.97 and Rules of the Auditor General Chapter 10.650.


Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting

and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in

Accordance with Government Auditing Standards

The Board of DirectorsFort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale Hospital

We have audited the financial statements of Fort Lauderdale Hospital, Inc. d/b/a Fort Lauderdale Hospital(the “Hospital”) as of and for the year ended December 31, 2010, and have issued our report thereondated June 20, 2011, which included a matter of emphasis paragraph concerning the Hospital’stransactions with its Parent, Universal Health Services, Inc. We conducted our audit in accordance withauditing standards generally accepted in the United States of America and the standards applicable tofinancial audits contained in Government Auditing Standards, issued by the Comptroller General of theUnited States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Hospital's internal control over financial reportingas a basis for designing our auditing procedures for the purpose of expressing our opinion on the financialstatements, but not for the purpose of expressing an opinion on the effectiveness of the Hospital's internalcontrol over financial reporting. Accordingly, we do not express an opinion on the effectiveness of theHospital's internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent, ordetect and correct misstatements on a timely basis. A material weakness is a deficiency, or combinationof deficiencies, in internal control, such that there is a reasonable possibility that a material misstatementof the entity's financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose described in thefirst paragraph of this section and was not designed to identify all deficiencies in internal control that mightbe deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies ininternal control over financial reporting that we consider to be material weaknesses, as defined above.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Hospital’s financial statements are free ofmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts and grant agreements, noncompliance with which could have a direct and material effect on thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit and, accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance or other matters that are required to bereported under Government Auditing Standards.

This report is intended solely for the information and use of the Hospital's Board of Directors,management, others within the entity, state awarding agencies, and the Auditor General of the State ofFlorida and is not intended to be and should not be used by anyone other than these specified parties.

June 20, 2011


Report of Independent Certified Public Accountants on Compliance with Requirements That Could

Have a Direct and Material Effect on Each Major State Financial Assistance Project and on Internal

Control Over Compliance in Accordance with Florida Statutes Section 215.97 and Rules of the

Auditor General Chapter 10.650

The Board of DirectorsFort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale Hospital

Compliance

We have audited the compliance of Fort Lauderdale Hospital, Inc. d/b/a Fort Lauderdale Hospital (the"Hospital") with the types of compliance requirements described in the State of Florida's Department ofFinancial Services' State Projects Compliance Supplement that could have a direct and material effect oneach of its major state financial assistance projects for the year ended December 31, 2010. TheHospital's major state financial assistance projects are identified in the summary of auditor's resultssection of the accompanying schedule of findings and questioned costs. Compliance with therequirements of laws, regulations, contracts and grants applicable to each of its major state financialassistance projects is the responsibility of the Hospital's management. Our responsibility is to express anopinion on the Hospitals compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States; Florida Statutes Section 215.97 andRules of the Auditor General of the State of Florida Chapter 10.650. Those standards require that we planand perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major statefinancial assistance project occurred. An audit includes examining, on a test basis, evidence about theHospital's compliance with those requirements and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Our audit does not provide a legal determination of the Hospital’s compliance with those requirements.

In our opinion, the Hospital complied, in all material respects, with the requirements referred to above thatcould have a direct and material effect on each of its major state financial assistance projects for the yearended December 31, 2010.

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Internal Control Over Compliance

Management of the Hospital is responsible for establishing and maintaining effective internal control overcompliance with the requirements of laws, regulations, contracts, and grants applicable to state financialassistance projects. In planning and performing our audit, we considered the Hospital's internal controlover compliance with the requirements that could have a direct and material effect on a major statefinancial assistance project in order to determine the auditing procedures for the purpose of expressingour opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness ofinternal control over compliance. Accordingly we do not express an opinion on the effectiveness of theHospital's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct noncompliance with a type of compliance requirement of astate financial assistance project on a timely basis. A material weakness in internal control overcompliance is a deficiency, or combination of deficiencies, in internal control over compliance, such thatthere is a reasonable possibility that material noncompliance with a type of compliance requirement of astate financial assistance project will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control overcompliance that might be deficiencies, significant deficiencies, or material weaknesses. We did notidentify any deficiencies in internal control over compliance that we consider to be material weaknesses,as defined above.

This report is intended solely for the information and use of the Hospital's Board of Directors,management, others within the entity, state awarding agencies, and the Auditor General of the State ofFlorida and is not intended to be and should not be used by anyone other than these specified parties.

June 20, 2011

Schedule of Findings and Questioned Costs

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalSchedule of Findings and Questioned CostsYear Ended December 31, 2010

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Section I – Summary of Certified Public Accountant’s Results

Financial StatementsType of auditor’s report issued: Unqualified

Internal control over financial reporting:

Material weakness(es) identified? yes X no

Significant deficiency(ies) identified that are notconsidered to be material weaknesses?

yes X nonereported

Noncompliance material to financial statementsnoted?

yes X no

State AwardsInternal control over major state financial assistance projects:

Material weakness(es) identified? yes X no

Significant deficiency(ies) identified that are notconsidered to be material weaknesses?

yes X nonereported

Type of auditor’s report issued on compliance for major state financialassistance projects: Unqualified

Any audit findings disclosed that are required to bereported in accordance with Florida StatutesSection 215.97 and Rules of the Auditor General ofthe State of Florida Chapter 10.650?

yes X no

Identification of major state financial assistance projects:CSFA Number

60.00660.030

Dollar threshold used to distinguish between type Aand type B programs:

Name of State Program

Baker ActSubstance Abuse Treatment and AftercareServices for Children

$300,000

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalSchedule of Findings and Questioned CostsYear Ended December 31, 2010

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Section II – Financial Statement Findings

No matters were noted.

Section III – State Financial Assistance Findings and Questioned Costs

No matters were noted.

Summary Schedule of Prior Audit Findings

Fort Lauderdale Hospital, Inc.d/b/a Fort Lauderdale HospitalSummary Schedule of Prior Audit FindingsYear Ended December 31, 2009

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Reference Program Questioned Costs

2009–01 CSFA 60.001 – Children's Baker Act Services None

CSFA 60.006 – Baker Act

CSFA 60.030 – Substance Abuse Treatment

and Aftercare Services for Children

ConditionThe contract requires the Hospital to notify the contract manager at least 10 days prior to staffing changeswithin management. The Hospital did not properly notify the contract manager in regard to the timingrequirement for staffing changes related to the Chief Executive Officer and Chief Financial Officer during2009.

StatusDuring 2010, the Hospital implemented policies to ensure the proper notification of the contract managerin the instance of management staffing changes. This included notifying the regional CFO of theHospital's Parent of the compliance requirement.

Documents

DP005D5857 Fort Lauderdale Hospital, Inc. rpts/2010...Fort Lauderdale Hospital, Inc. d/b/a Fort Lauderdale Hospital (the “Hospital”), a wholly–owned subsidiary of Universal Health